Cloudflare rallies after hours on a forecast beat and higher guidance

What did Cloudflare report?

Cloudflare (NYSE: NET) shares surged 14.3% to $280.14 in after-hours trading Thursday, once the regular session had closed. The cybersecurity company had just released its third-quarter results.

Why it matters: Revenue for the quarter came to $782.513 million, a gain of 39% from the same quarter a year earlier. The Street consensus, meaning the average analyst forecast, was $738.532 million.

Earnings per share, the company's profit divided by its share count, reached 38 cents. Analysts had looked for 34 cents on average.

Chief executive Matthew Prince called it the best quarter in Cloudflare's history. He said annualized revenue, recent sales scaled up to a full-year pace, had passed $3 billion.

How far did Cloudflare raise its outlook?

Guidance is a company's own forecast for results still to come. Investors often give it more weight than the quarter just finished, because it describes what lies ahead.

For the fourth quarter, Cloudflare expects revenue between $845.00 million and $846.00 million. Analysts had penciled in $797.67 million. The company also sees fourth-quarter earnings of 43 cents a share, against an average estimate of 38 cents.

The full-year numbers moved too. Cloudflare now projects revenue of $2.963 billion to $2.964 billion, where its earlier range ran from $2.864 billion to $2.870 billion. The analyst average for the year stood at $2.872 billion.

Its full-year earnings forecast is now $1.35 a share. Before this report, the range was $1.25 to $1.26.

Why does the gain stand out?

The rally arrived after a hard day for technology shares. In Thursday's regular session, the technology sector fund (XLK) tumbled 8.0%.

The Nasdaq-100, which tracks the largest Nasdaq-listed companies and leans heavily on tech, tumbled 6.4%. The selling went well beyond tech: only 142 of 1,104 stocks rose, while 960 fell.

Cloudflare reported after that close, so none of its news showed up in Thursday's index moves. Its evening gain was a reaction to its own results on a day the wider market went the other way.

What could happen next?

What’s next: After-hours prices come from thin trading, with far fewer buyers and sellers than in the daytime. A handful of big orders can push prices around, and such moves often fade or flip once the full market opens.

The open question is whether the gain holds when regular trading resumes Friday. That session will also absorb the October jobs report, due at 8:30 a.m. ET before the open.

Hiring and wage figures could move nearly every stock, Cloudflare included. The October consumer price index, the monthly inflation report, follows on Nov. 10 at 8:30 a.m. ET.